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Enfranchisement the basics

Are you the leaseholder of a flat or house? If so, you may have individual and collective rights relating to your property.

These rights are based on the concept of ‘enfranchising’ the leaseholder so they have greater rights against their landlord. A leaseholder can force the landlord to grant a new lease or to force the sale of the freehold, subject to qualification criteria of the property and the status of the leaseholder.

The legislation which governs these rights is designed to allow the leaseholder to improve their title or take control away from the landlord who could otherwise ‘hold them to ransom’ or impose unfair requirements.

A brief summary of enfranchisement rights is set out below. All of these rights have certain qualification criteria relating to the property itself and the status of the leaseholder.

Lease Extension (individual right)

The leaseholder of a flat can force the landlord to grant them a new extended lease adding 90 years on to the existing term at a peppercorn ground rent (nil). The lease will be granted largely on the same terms as the original.

The leaseholder will have to pay the landlord a premium for the new lease.

Freehold Purchase (collective right)

The leaseholder can join together with at least 50% of the flats in a property and force the sale of the freehold to them. They would then become their own landlord and can decide between them how the block is managed.

The leaseholders will have to pay the landlord a premium for the freehold.

Right of First Refusal (collective right)

When the landlord wants to sell the freehold interest of a property consisting of two or more flats, the leaseholders have the right to be offered the freehold first.

More than 50% of the flats will need to join together to accept the landlord’s offer. The landlord is obliged to give the leaseholders notice of such a sale confirming this right.

Right to Manage (collective right)

The leaseholder can join together with at least 50% of the flats in the property to obtain the right to manage the building from the landlord or any current management company.

There is no premium payable for this right and no fault needs to be proved in relation to the current management.

This note provides a very basic summary of the rights available to leaseholders, subject to strict qualification criteria which are set out in our Enfranchisement pages. If you would like more information on any of these matters please contact Darren Coleran or William Bethune.